After a brief negative correction during European trading hours on Tuesday. The EURUSD gained bullish momentum and finished in the green. In the Asian session on Wednesday. The pair rose to its highest level in two months, 1.1037, before falling slightly.
The risk-averse market environment made it tough for the US Dollar (USD) to overcome selling pressure on Tuesday. Early Wednesday, US stock index futures trade flat. Allowing the USD to remain strong versus its competitors for the time being.
The US Bureau of Labor Statistics will provide data for the second part of the day. will publish June inflation statistics. The significant drop in the US Dollar Index. since late last week shows that investors may have already priced in a low Consumer Price Index (CPI).
The CPI is expected to fall to 3.1% in June from 4% in May. The Core CPI is predicted to grow 0.3% on a monthly basis, excluding volatile food and energy costs. If core inflation increases faster than expected in June. The USD may make a comeback, weighing on EURUSD. A figure that matches experts’ expectations might also assist the USD gain. Strength through a ‘buy the rumor, sell the fact’ market activity. A monthly Core CPI print, on the other hand Following the knee-jerk reaction, a rate close to 0% might open the door for additional USD depreciation.
EURUSD Technical Analysis
The EURUSD is trading at the top limit of the ascending regression channel that began in early June, and the four-hour chart’s Relative Strength Index (RSI) indicator remains near 70, indicating a lack of selling activity.
If the pair continues to fall following the release of US data, 1.1000 (psychological level, mid-point of ascending channel) might operate as initial support before 1.0950 (lower-limit of ascending channel) and 1.0920 (100-period Simple Moving Average).
On the upside, 1.1060 (the top limit of the ascending channel) serves as the first resistance level before 1.1100 (the psychological barrier, the static level).
